WTO: Missing in Action?

22 Jan 2016

UNRISD is committed to ensuring that social development concerns and objectives remain prominent in the implementation of the 2030 Agenda for Sustainable Development. This requires balancing social, environmental and economic goals so that the effects of change in one domain do not undermine progress in another. Many contend that the existing multilateral architecture is not yet sufficiently coherent for governments to realize their sustainable development objectives. The following commentary considers the outcomes of the World Trade Organization (WTO) Ministerial Conference held in Nairobi in December 2015. It offers a critical look at those outcomes given governments’ parallel commitments to the realization of a complex and interdependent set of Sustainable Development Goals, and to limiting the causes while addressing the consequences of climate change.

Sophia Murphy is a Visiting Research Fellow at UNRISD, working with the Social Dimensions of Sustainable Development Programme. She is a PhD candidate in Resource Management and Environmental Studies at the University of British Columbia. She has worked for over 25 years in international development, focused primarily on global trade rules and food security. Her research has been awarded a Vanier scholarship, funded by Canada’s Social Sciences and Humanities Research Council, and a scholarship from the Pierre Elliot Trudeau Foundation.

WTO: Missing in Action?

The World Trade Organization’s 10th Ministerial Conference, held in Nairobi, Kenya from 15-18 December came right on the heels of the final outcome of the 21st Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC). The contrasts were striking, and not just because of the shift from Europe to Africa, from northern winter to equatorial rains, and from environment to trade. There was also the level of interest: everyone who could not be in Paris was watching what went on there from afar, while few came to sit in the make-shift tents put up by the Kenyan Government as an NGO centre. The protest marches, organized by farmers’ organizations, gathered dozens of people rather than the several thousands who had come to WTO Ministerials past. The multinational lobbyists were few, many having turned their attention instead to plurilateral agreements such as the Trans Pacific Partnership, or TPP. Despite its long-standing support for the WTO and its agenda, The Financial Times newspaper did not even send its world trade editor. It seemed that the world could hardly have cared less.

Most importantly, the governments that met in Paris were evidently chastened by their repeated past failures and were at last willing to respond to the mounting political pressure to take action on climate, pressure that was evident in the demonstrations and civic actions that took place across the planet as the governments negotiated. Leaders came to Paris intent on finding a way through the political, economic and environmental complexities of reinventing the basis of economic life on the planet. We need the same for trade. Instead, the heart of the fight in Nairobi was over what the negotiating agenda should include. Many rich countries came to Nairobi wanting to tighten intellectual property rights, open up government procurement for foreign competition, and to deregulate investment and competition laws. Most poorer countries disagree vehemently with this agenda. They want to first complete unfinished business related to trade in agricultural commodities and industrial goods.

Juggling competing interests
The debate really matters because multilateral trade rules are a practical way to considering the deep power asymmetries that mar the international community. The alternative—plurilateral talks managed on a by-invitation basis—leaves the least powerful countries with no voice at all in the discussions. But it is a debate that needs domestic political support. Yet governments treat trade as a top-secret matter, frightened to even engage with parliaments, let alone citizens, on what is at stake. Industry groups get privileged access to their ministers and diplomats, while few countries bother to meet with public interest groups.

Thus, sadly, in Nairobi, governments had their sights set far—far—lower than they had in Paris. There were a few private interests there, keen to maintain privileges (the US cotton industry, for instance). But they had little to fear, despite the havoc their programmes cause for some of the world’s poorest people; the United States, as perhaps the single most powerful WTO member, was also not there for much more than blaming others for failure, despite their starring role in that drama. Just two days before the Ministerial began, the US Trade Representative published a scathing opinion piece in The Financial Times. (A piece I responded to at the time). More broadly, very few WTO members felt any domestic pressure to get a result in Nairobi and what pressure was evident was all in the name of shutting down debate and closing ranks.

This does not mean the Ministerial was not hard work: as one diplomat said to me, failure takes a lot of work, too. The diplomats met and argued, called impromptu briefings, and negotiated not just far into the night during the week, but also apparently felt the need for what has become the customary unscheduled additional day of talks to come up with a final declaration.

Little new trade liberalization out of Nairobi
Ultimately, the so-called defensive interests prevailed—there will be little new trade liberalization out of Nairobi. For the diehards (and I am one) it was satisfying to see developed countries commit to the immediate elimination of export subsidies in agriculture (though there are some exceptions that will take time to be phased out). Yet the push to end other distortions in international agricultural markets yet again went nowhere. The EU was practically begging to be allowed to end its export subsidies but needed the US to make concessions on its use of export credits and food aid. The US more or less refused, despite some pressure from IATP and other public interest groups that work on food aid before the Ministerial.

Meanwhile the vexed (and aging) “new issues” of investment, competition and public procurement that developed countries want to negotiate and developing countries edged their way a little closer to the negotiating table, though not much closer. There are lots of truly new issues the WTO could usefully look at—to name just a few, consider the subsidies given to oil and gas industries, the failure to manage price risk and volatility in food commodity markets, and the long-standing but unaddressed market distortions created by oligopolies in agricultural input and commodity trading sectors.

But no objective scan of the multilateral institutions today would alight upon the WTO as a place where governments get things done. The UN General Assembly has come through with an ambitious agenda of development issues that will absorb developed and developing country attention for the next 15 years with the Sustainable Development Goals, looking at poverty, inequality, vulnerability and more. The UNFCCC has—finally—turned a corner to shift the debate towards what each country will do itself, and just a little away from the obsession with what everyone else should do to curtail climate change. By contrast, the WTO membership is petulant; the governments refuse to lead by example, preferring instead to point the finger at other countries, blaming others for the lack of progress rather than looking closer to home first.

For the WTO to be able to contribute, its member states must adopt a mandate for the organization that moves away from a narrowly defined (and economically questionable) faith in open markets as a panacea for all the world’s ills. There is much open markets can do, and much they cannot. There is a rich debate under way about the future of the planet and the realization of sustainable development. The WTO—which could offer a lot to the debate and to the realization of positive change—is so far missing in action.

NOTE
This piece is the second of two originally posted by the Institute for Agriculture and Trade Policy: